Crude oil holds $76 mark amid Middle East tensions; MCX crude futures cross Rs 6,300

Crude oil futures continued to trade in the green, despite global volatility and some profit booking abroad. July crude oil futures on the Multi Commodity Exchange (MCX) were trading at Rs 6,324 per barrel, up Rs 25 or 0.4 per cent from the previous close.

Meanwhile, on the COMEX, US crude contracts hovered at $74.54 per barrel, down $0.30 or 0.40 per cent. Brent oil futures were also down $0.44 or 0.58 per cent, trading near $76.01.

Analysts remain particularly concerned about the strategic Strait of Hormuz, through which around 20 per cent of global oil shipments pass. Key energy infrastructure, including Iran's Kharg Island and oilfields in Iraq, could be at risk if the conflict expands, analysts say.

Iran, which produces about 3.3 million barrels per day, is OPEC’s third-largest producer. A threat to its output, especially in light of US President Donald Trump’s warnings, is keeping traders on edge. On Tuesday, Trump demanded Iran's "unconditional surrender" and said US patience was "wearing thin", although he added that the US had no plans to target Iran's Supreme Leader "for now."

In Geneva, Iran's ambassador to the United Nations said Tehran had warned Washington that it would respond firmly to any direct US involvement in Israel's military operations.

Investors are also closely watching the US Federal Reserve’s policy decision due later on Wednesday. The central bank is expected to keep interest rates in the range of 4.25 to 4.50 per cent, but some analysts believe the ongoing geopolitical risk and signs of slowing global growth could prompt a rate cut as early as July, sooner than the September timeline currently anticipated.

While lower interest rates typically support oil prices by boosting economic activity, rising energy prices could also create a fresh source of inflation, complicating the Fed's next steps.